Member Info for hitman1a

Looks like it's hooked up.. 3.14pm

I think it's mainly the accruals ($296m) and trade creditors in the balance sheet holding this back.. Accruals are massive.. ie work done but no invoice received yet is how i understand it... Never did hear anyone ask for a breakdown.. Always thought it was a $100m rolled over into 2019 on contracts, so will have to ask at AGM..

2019: earn say $300m profit.. pays for current liability debt repayments plus bits ( $311m, note 19). other depletion cashflow pays for the equivalent of 2019 £275m capex. Will accruals get transferred to Trade Creditors ($162M) at some point.. ? What's the total expected figure at 31.1.2019. To me it looks like the same as start of year

31.12.2018 :Current liabilities $984m is greater than current assets $684, by $300m.. so this ratio needs to be fixed by end of year with 2019 $300m profit...

Perhaps things will look better in 6 mths.. but really needs a year to look ok.. and another year to look better, as the RCF payment in 2020 is $155m, little capex, so large cash balance can sort out all the overdue supplier invoices.. (trade creditors and accruals).

Has anyone found any detail on accruals?

Platts are expecting Brent to climb perhaps $7 in light of IMO regulations coming into effect in 2020. Another article I read indicates on a historical basis, any new regulations cause spikes in price. Question is how early in Q4 2019 does the surge occur.

JS already confirmed he would layer on hedges when the time was right. AB already confirmed the Kraken discount has narrowed to less than $2.. So let's just see what Opec say in June. If they rollover the production caps into 2H 2019, then you could be looking at $80 at somepoint towards the end of the year.

One of the people who asked a question yesterday was quoted in another article :

Something like "Enquest still has a lot of work to do to repair the balance sheet.". so not sure what debate happened after the Q& A, but some are not as enthusiastic as us... but at least the point has come where that process has started..

Motley article is a fair summary.. speculative at 20p only because of the oil price .. Target 40p for 1 year

What's the target in 2 years on the same business plan : I thought 58p yesterday..

Gas revenue mentioned by JS yesterday from Magnus was another very good bonus.

18.74p now.. no point fighting the algo today.. but we know 2019 realized prices will be 10% higher this year.. and production 20% higher.

The market is clearly under-estimating the EBITDA for Enquest over the next 2 years.. it's too good to be true?.
Then again they did invest billions.. so I'd expect to make that cost back plus a profit and repair the balance sheet quite substantially every year.

As they say on Gold Rush.. gold in the hand is worth a lot more than gold in the ground.

GL.

Hi L3T,

You have to assume other assets have been dialled up to produce a bit extra to compensate for Kraken running on one train for an extended period of time..This time frame is perhaps from December to earlier this week..

I'd say Magnus can do 21k, but Kraken should have been doing 25k on one train.. It's possible some work was done on train 2 as well over the last 3 months to give the estimated 20k calculated by loading intervals since January..

Yes Smalltrader

If the market gives credibility to the cashflow of the 13 yr reserve life, then we should exceed the conservative numbers.
Today I thought the expertise and business plan of Enquest came through very well..

Yes I agree Pelle. We have new wells in Malaysia, Magnus and efficiency gains in Kraken form 63% to 80% all coming online in Q4 2019 to take us into 2020 to alleviate any natural declines..

I really don't think it's essential to drill in 2020.. Bob said they knew in the balance of what was wrong with Kraken, so fill fix it..

Nice to see the company balance sheet improve today as well.. 58p target in 2 years. or 35p this time next year. if we follow the 44% of balance sheet as of today( $984) and just follow the path.

L3T

We know Magnus did 21,528 bopd in Dec 2018, plus the AB confirmed in the presentation it still does over 20k/day..
We know there is a 3 week shut down on Magnus in Q2 from the ops notes which we can build into yearly production forecasts.

Are you thinking Magnus is doing 25k in Jan and Feb, so the rest of portfoilio must be taking a hit somewhere?

JS confirmed that without drilling and pipeline expenditure, the yearly basic maintenance to operate/capex is $50m or less. So they could skip 2020 and pay down the RCF.

Happy to put that in the 2020 cashflow forecast if they don't do anything.

They are after all the leanest operator around..

From Notes in Accounts.

With Alma/Galia expected to cease production early in the next decade, the focus is on production optimisation and
cost control, with preparatory decommissioning plans now under way. A two-week scheduled shutdown is planned for
the second quarter.

Kraken: A three-week maintenance shutdown is scheduled for the third quarter.

(looks like major works.. so confirms what Cairn's said and explains 30k/35K for year), .. I'm sure it can do 40k today.. just not reliably every day all year round.

it's on the slide but

1. 2019 : $205m , already paid $55, so $50 due 1 April,, balance $100m in Oct
2. 2020 : $155m
3 2021: $439m
4. 2023 : $965m bonds..

Likely imv , most of $439m could be paid down in 2020.

I was also impressed with Bob , when he said there was a specialist FPSO team on board Kraken and they would stay until the job is done..

No one asked about the September shut down or how long it would be.. or when the next tanker would offload..

Compared to the detail in the RNS, speakers and presentation, I felt most analysts were out of their depth today.

Enquest are in a different league now with Magnus..

This is the moment.. This is our Independence day.. The tide has turned...

As AB says .. " the numbers will speak for themselves over time". i'd say 21 mths (end of 2020).

Remembering that EBITDA includes depreciation on the Kraken lease asset, but excludes the actual lease payments that aren't on the P/L account, but go straight against the lease creditor on the balance sheet. Other than this adjustment. i'd expect all analysts to run the numbers and be more optimisticgoing forward into a Brent $75 environment by Q3 .

SP: Targets: 20p today, plus additional 5p every 3 mths..

This looks more like the business we all invested in.. and much more detail on issues so looks like they have taken noticed of some of the topics discussed on various forums..

Just need to be patient and deleverage..

If they are content with trading with a certain amount of debt..( $750m /$1b) , then what do they do with all the cash that comes in each year after 2020?

The market cap should improve each month, as the earnings are generated..

1. $93.2 lease cost in accounts so, FPSO costs $255k/day (might be 63%) so could increase if we get to 80%
2. Some Kraken loadings selling for $2 discount off Brent as per indicated by E121, and low sulphur content fits in well with next years IMO rules
3. Magnus is fantastic
4. DC4 all on, a few days ago, both trains on now. Never did say now much it could do on a good day.. Might be 40k plus .
5. Will have to review again what JS about running costs on slide 21.. was it basic capex $50m/ year..

Well done Enquest imv.

Feels like PMO are going to bid for us tomorrow,

lol

Come on Squif

70k top of the range, Brent 68.40.. what's that $344m FCF.. with only $205m to pay this year.

Annual FCF equals market cap.. can't image why people are buying into this .. seems too good to be true

Very comfortable meeting tomorrow. but most of today's gain must be shorts closing..

Just depends on Kraken really..

Analysts never really concern themselves with other assets.. but Enquest might give more focus to Magnus tomorrow..

Hi TW

More compensate for the loss in revenue from Kraken,

Even the Bond paperwork refers to the expectation of plateau at 50k bopd.

I'm sure in the old days.. the company, the auditors, the banks , the printer, and yes some analysts had copies of the report before results..

Perhaps today the analysts get a copy after the market closes, so they can prepare questions for the following day.

Thing is L3T.. your right about the money spent on those 3 projects and whether the production levels are worth the money..

Even Cairn took a hit.. so AB saying yes they did reach 50k on Kraken for a day.. isn't what everyone was expecting. It was meant to last a few months at least and then tail off.

It's now reliant on Brent moving up $5 to compensate.

Hi Pelle

I think the bonds get extended by one year and a bit to October 2023, if the RCF isn't fully repaid or refinanced by October 2020.. so definitely won't be paying it all off before that date, so we qualify for the extension.

So we really have plenty of time from I Jan 2021 to save $1b (33 mths) to pay the bonds off.

250MB,., but using 100MB ( 4 years) to pay off loans.

Saudi will want $72 plus trending to $75..which gets us Shareholders out of jail that much sooner.

They aren't allowed to use the share repurchase program unless the Bank gives permission.. some sort of covenant in place.

Company just focusing on repaying debt in a considerable way.. I would aim to do all of RCF ($785m) by 31 Dec 2020.

Then Bonds.. April 2022. Might be an extension clause in there, as it looks a bit tight. I think AB was saying April 2023, at Davos.. Think they need till April 2023 really to pay all of the bonds. An extra Brent $5 goes a very long way in helping deleveraging earlier.